Presentation Transcript

1. AS Economics and BusinessWhat is unemployment and how does it affect us all?Unit 2b

   By Mrs Hilton for revisionstation
2. Lesson Objectives To be able to discuss unemployment, costs to the economy, opportunity cost and social cost To be able to discuss changes in occupational trends and changes in who works and the way we work To be able to complete some past paper questions
3. Starter Does anyone in your family have a job – who works? Mum / dad / brothers / uncles / aunties? Do you think this would have been the case in 1814 or 1914 (see poster)?
4. Who are the unemployed and how did they get “unemployed”?
5. Definition of unemployment Unemployment - The number of people willing to work but out of work and seeking work Unemployment rate - % of the working population out of work Current unemployment rate is 6.9%
6. Consequences of unemployment for business
7. Consequences of unemployment for society Welfare payments to those on jobseekers allowance have to be paid out by the government from public money – contributed by every working person in their tax Jobseeker’s Allowance (JSA) is at least £57.35 a week to help people while they look for work. They also have to sign on at the jobcentre every 2 weeks and prove that they have been looking for work. Gov site on jobseekers
8. Opportunity cost of unemployment If the government is spending money on paying jobseekers allowance it cannot spend it elsewhere on health care the NHS or the police. This is the opportunity cost of unemployment. Government is unable to pay wages of these professionals because it is paying for the unemployed to receive jobseekers allowance
9. Costs to the unemployed and their dependants
10. Social Costs of unemployment to the local community Negative affect of unemployment Increased crime and violence on the streets and vandalism (amongst the young and unemployed) Areas become run down, shops go out of business, households have no money to take care of their houses or gardens Economic depravation
11. Cost of unemployment to taxpayers Government pays out benefits such as housing benefit and jobseekers allowance to those who are unemployed Government has loss of tax revenue from those not working Loss of VAT from purchases that unemployed cannot make because they have no income As a result of these losses the government may have to borrow more money to keep spending levels the same
12. Costs of unemployment to the economy Loss of output of workers who are now unemployed but would have worked, and therefore a loss of goods that the economy could have produced had they been working – this reduces the country’s GDP and moves the country away from an efficient allocation of its resources Long term unemployed may become deskilled as they have not had training for a while, this reduces their chances of getting employment. E.g. To be an electrician they have to pass regular tests Rising unemployment is linked to a drop in demand for goods and services – which can lead to further unemployment
13. Occupational trends Traditionally the man went to work, now is it not unusual for a woman to work and have a family (equality laws have helped this) Rise of the self-employed Reduction in number of those working in manufacturing to just 8% of the workforce from 25% in 1973 (ONS) Amount of people working two jobs has doubled since the 70s Rise in those working part-time, flexi-time, temporary and zero hour contracts Deindustrialisation has lead to structural change so a shift in jobs from manufacturing and farming into the tertiary sector knowledge economy jobs; banking, finance, law
14. Sample question 1 Analyse two ways in which business selling on eBay might be affected by increased unemployment in large cities [6]
15. Answer question 1 Knowledge 2, Application 2, Analysis 2 Knowledge/understanding: up to 2 marks are available for defining what is meant by unemployment e.g. the number of people willing and able to work but out of work (1 mark) and/or stating an effect on businesses of increasing unemployment e.g. less/more sales revenue (1 mark) and/or redundant may set up their own business (1 mark) Application: up to 2 marks are available for applying these factors to large cities e.g. an increase in the sale of cheaper/inferior goods sold online (1 mark) by unemployed people from cities like London/Nottingham/ Birmingham (1 mark), cities have a larger recruitment pool (1 mark) Analysis: up to 2 marks are available for giving a reason/cause/consequence of an increase in unemployment e.g. those businesses selling cheaper/inferior products may benefit as unemployed consumers switch to cheaper substitute goods online (1 mark); some businesses selling luxury goods may lose out because unemployed consumers can no longer afford these products (1 mark) ; may lead to unemployed workers setting up their own online businesses due to the low barriers to entry on eBay/increased competition for existing online sellers (1 mark)
16. Sample question 2
17. Answer question 2 Answer D – welfare payments • Unemployment is the number of people willing and able to work but out of work/out of work but actively seeking work/unemployment rate is the percentage of the working population out of work (1 mark) • An unemployed person will have to claim welfare benefits such as job seekers allowance whilst out of work (1 mark) • This can be a problem because the UK Government has less to spend on other public services (implied opportunity cost) (1 mark) Up to two of the marks above can be achieved alternatively by explaining distracters, e.g. • A is wrong because GDP will not increase with a rise in unemployment but will decrease due to workers not being economically active/reduced aggregate demand due to lower consumer spending (1 mark) • B is wrong because wage demands are likely to fall as there is a larger pool of workers to choose from/fear of losing their jobs (1 mark) • C is wrong because revenue from income tax will decrease rather than increase due to fewer people being employed and paying income tax to the government/ taxes may have to rise to pay for additional welfare payments in the UK economy (1mark)
18. Sample question 3 The regeneration of East London will change employment and output patterns in the region. Evaluate the likely impact of the Olympic Games on a) the residents of East London b) local businesses in East London [14]
19. Sample question 4 Briefly explain one reason why the government might want to reduce unemployment. [4]
20. Answer question 4 Knowledge: up to 1 mark is available for describing what is meant by unemployment levels e.g. unemployment is when a person is actively seeking work (1 mark) or why any Government would want to reduce unemployment.(1 mark) Application: up to 2 marks are available for contextualising the response by explaining why the Government would want to reduce unemployment levels in the UK e.g. the UK Government would want to reduce unemployment levels in order to reduce benefit payments (1 mark), reduce social costs (1 mark) , economic costs (GDP) (1 mark) and increase tax revenues (1 mark). Analysis: up to 1 mark is available for developing these reasons e.g. There is an opportunity cost of unemployment and the more people in employment, the better the economy is
21. Sample question 5 Evaluate the impact on an Indian business the effect of rising unemployment [7] This was half of a 14 mark question
22. Key points for question 5 e.g. Rising unemployment may affect the demand for a product and /or increase the number of potential workers available to choose from. e.g. Some Indian businesses may or may not be affected by a rising in unemployment - depends on the nature of the product. e.g. Changes in demand will depend upon YED and the scope and extent of the unemployment. It may present Indian firms with a wider choice of labour and even the opportunity to force down wages. A wider choice of labour will be of little use if they lack the required skills. Increased unemployment may reduce demand for goods and services within India.